Which Approach Predicts That If an Economy Operates at Full

question 113

Multiple Choice

Which approach predicts that if an economy operates at full employment and faces a trade deficit,currency devaluation (depreciation) will improve the trade balance only if domestic spending is cut,thus freeing resources to produce exports?

• A) The absorption approach
• B) The Marshall-Lerner approach
• C) The monetary approach
• D) The elasticities approach

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Definitions:

Myelin

An insulating layer, or sheath, made of protein and fatty substances, that surrounds the axons of some neurons, enabling fast and efficient transmission of electrical impulses.

Synaptic Cleft

The small gap at a synapse between neurons, across which neurotransmitters move from one neuron to another.

Terminal Buttons

The small knobs at the end of an axon that release chemicals called neurotransmitters into the synapse, thereby transmitting nerve impulses to another nerve cell.

Cell Membrane

The thin, flexible barrier that surrounds cells, controlling the movement of substances in and out of the cell.